Re: Tonight. I Have No Idea.

492
122
Sun, Aug 7, 2011 - 1:26pm

It's Sunday in the U.S., a little after 1:00 EDT. The Globex opens in about five hours. There seem to be quite a few people who are interested in my opinion regarding how the metals will trade tonight and tomorrow. Frankly, I have no idea.

First of all, I've been on the record saying that I didn't think a ratings downgrade was coming. Oops. Shows you what I know. I am still stunned that it happened. Of course it needed to happen and AA+ is still too generous. A or A- would seem to be more fitting. However, since there is no principal risk in U.S. government debt (the Fed can print all the money they need to pay off bondholders), AA+ is OK, I guess. Now on the other hand, if S&P started taking inflation risk into consideration and began to factor in that you're really only getting 50c on the dollar back in principal purchasing power...well, lets just say that U.S. debt would be relegated to junk status. Regardless, U.S. debt is now rated AA+ and the effects of this will be far-reaching. We'll go into this in greater detail later this week when I have more time and can think more clearly. (For now, I'm a little hung over and I need a nap.)

As it pertains to the PMs...There is NO WAY that this news is not bullish. Extremely bullish. In the intermediate and long term. What you don't know about is tonight and tomorrow. As we saw last week, when everything else is being sold, the PM "baby" often gets thrown out with the bathwater. Gold should open UP at least $50. It should trade UP $100 tomorrow. Will it? Again, who knows? Gold may open higher and then get instantly battered lower in a global rush for liquidity.

Just watch. U.S. debt gets downgraded but the POSX and the long bond will both probably trade higher in a flight to safety. Oh well, it doesn't really matter. Like I said, gold may be down tomorrow. Who knows? But what I do know is this: Gold will be higher a month from now. It will be higher six months from now and it will be higher still a year from now. In that context, what happens tonight is of no consequence.

I'll try to have an update this evening, after things have been trading for a while. Until then sit back, relax and enjoy the fireworks. TF

11:55 pm EDT UPDATE:

Too tired to type but I wanted to give you this update with these levels to watch overnight and into Monday.

Turd nite nite now.

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  492 Comments

Ojibwemowin
Aug 7, 2011 - 1:32pm

No matter what happens it

No matter what happens it will be interesting!

esib100oz
Aug 7, 2011 - 1:35pm

I got the popcorn ready. And

I got the popcorn ready.

And if silver goes low enough... the credit card !

Ford Rep
Aug 7, 2011 - 1:36pm

How could one know.

I can only hope this might be a good opportunity to pick some discounted miners and trade a little gold for a little silver.

underwaterfrog
Aug 7, 2011 - 1:36pm

Historic

Times we live in. Just overjoyed I'm not sitting on the sidelines with my mouth open and have prepared. Thanks for everything you do Turd. Very unfortunate however that alot of hard-woking, good intentioned people will get hurt no matter their ability (in) to comprehend or face the realities regarding the den of thieves that govern our financial world. One can only hope that these offenders will (at the very least) endure the same amount of suffering as the population at large.~

cpnscarlet
Aug 7, 2011 - 1:38pm

Accuracy and Precision

New Here -

Engineers know very well the difference between accuracy and precision. Anyone in PMs is accurate that the prices will be higher in the future. But it takes a real expert (and luck?) to know precisely when things will occur. Even Jim S was not terribly precise about 1650 timing, but he sure has been accurate for many years.

TF - My opinion since I started reading the PM blogs many years ago is that you are the most imprecise PM big-blogger, but still thoroughly accurate AND entertaining. Me? I sold VXX Thursday AM to buy more SIVR. In due time, we'll see how imprecise I was/wasn't.

Rocket Scientist

beardeus
Aug 7, 2011 - 1:41pm

I predict that gold hits

I predict that gold hits $1,700 tomorrow.

cris
Aug 7, 2011 - 1:44pm

An interesting thought from Ted Butler

He has referred to this in the past as the Full Pants Down:

Invariably, at times when the price of silver sells off, commentary is issued that suggests that silver investors are selling to raise money to buy gold, or in order to put money into other assets. Aside from the fact that silver investors rarely sell collectively at all (except in the paper market), even if they did sell, the amount of money that could possibly be raised is so small as to have little meaning to other markets, like gold. Even if every investor holding the one billion ounces of silver bullion did sell at once, the potential $40 billion proceeds would amount to less than 1% of the gold bullion in existence. I’m also waiting for the stories that suggest that silver bullion investors are selling in order to buy recently-downgraded Treasury securities or stocks where the total value of silver is a small fraction of 1% of those markets. Even if silver investors did sell en masse, the proceeds would have little impact on other markets like gold, stocks or bonds.

But what about the reverse; what if a very small number of gold or stock or bond investors decided to buy silver for reasons of relative value or safety? One percent of gold’s $5 trillion bullion value is equal to $50 billion, more than all the silver bullion in the world. World stocks and bonds are measured in the many tens of trillions of dollars and the smallest fraction of one percent would swamp the silver market. My point is simple – there is such a small amount of silver in the world that this is a one-way street. Selling all the silver in the world wouldn’t amount to anything in terms it going into other markets; but the selling of the smallest percentage of any other market to put into silver would have a dramatic impact on the price of silver almost beyond comprehension. It is this basic dynamic that lies behind the greater relative returns favoring silver in the long run relative to gold and other asset choices.

Bay of Pigs
Aug 7, 2011 - 1:59pm

Flight to safety?

We always hear that term and I guess as long as people have faith in the USD, it will apply.

I say times are changing and it won't apply before too long. Gold will soar as people begin to realize the implications of the "weak dollar policy" going forward.

Good riddance Greenspan, Rubin, Summers, Bernanke, Paulson and Geithner...your legacy will be one of being financial terrorists and traitors to your own country.

Basturd Toadflax
Aug 7, 2011 - 2:02pm

as always

BTFD. keep stacking.

cpnscarletbeardeus
Aug 7, 2011 - 2:09pm

Gutsy

$1700? Gutsy Call. However, a wager over the internet is dubious at best, alas.

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Key Economic Events Week of 2/17

2/18 8:30 ET Empire St Manu Idx
2/19 8:30 ET Producer Price Idx
2/19 8:30 ET Housing Starts & Bldg Perms
2/19 2:00 ET January FOMC minutes
2/20 8:30 ET Philly Fed
2/21 Fed Goons all day at Chicago Conf.
2/21 9:45 ET Markit flash Feb PMIs

Key Economic Events Week of 2/10

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Key Economic Events Week of 12/2

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